(e) the term "land development" means the process of making, installing, or constructing improvements.

BASIC CONDITIONS FOR INSURANCE

SEC. 1002. (a) The Secretary is authorized (1) to insure upon such terms and conditions as he may prescribe, any first mortgage (including advances on such mortgage) in accordance with the provisions of this title, and (2) to make a commitment for the insurance of such mortgage prior to the date of execution of such mortgage or prior to the date of disbursement of the mortgage proceeds. No mortgage shall be insured under this title after September 30, 1985, except pursuant to a commitment to insure issued before such date. (b) The mortgage shall

(1) be executed by a mortgagor, other than a public body, approved by the Secretary;

(2) be made to and held by a mortgagee approved by the Secretary; and

(3) cover the land to be developed and the improvements to be made with the assistance of the mortgage insurance under this title, except facilities intended for public use and in public ownership.

(c) The principal obligation of the mortgage shall not exceed the sum of 80 per centum of the Secretary's estimate of the value of the land before development and 90 per centum of his estimate of the cost of such development.

(d) The mortgage shall

(1) contain repayment provisions satisfactory to the Secretary and have a maturity not to exceed ten years, or such longer maturity as the Secretary deems reasonable (A) in the case of a privately owned system for water or sewerage, and (B) in the case of a new community approved under section 1004;

(2) bear interest at such rate as may be agreed upon by the mortgagor and the mortgagee, except that the Secretary may agree to a reasonable extension of the term of a mortgage, the maturity of which is limited by this paragraph to not more than 10 years, if the Secretary determines that unusual or unforeseen circumstances make such extension necessary to avoid undue hardship to the mortgagor,

(3) contain such terms and provisions with respect to protection of the security, payment of taxes, delinquency charges, prepayment, additional and secondary liens, and other matters as the Secretary may in his discretion prescribe.

(e) A property or project to be financed by a mortgage insured under this title shall

(1) represent a good mortgage insurance risk; and

(2) involve improvements that comply with all applicable State and local governmental requirements and with minimum standards approved by the Secretary.

LAND PLANNING

SEC. 1003. (a) The land development covered by a mortgage insured under this title shall be undertaken pursuant to a schedule,

conforming to such requirements and procedures as the Secretary may prescribe, that will assure the use of the land for the purposes for which it is to be developed within the shortest reasonable period consistent with the objectives of sound and economic community growth or urban development.

(b) The land development shall be undertaken in accordance with an overall development plan, appropriate to the scope and character of the undertaking, which

(1) has received all governmental approvals required by State or local law or by the Secretary;

(2) is acceptable to the Secretary as providing reasonable assurance that the land development will contribute to good living conditions in the area being developed, which area (A) will have a sound economic base and a long economic life, (B) will be characterized by sound land-use patterns, and (C) will include or be served by such shopping, school, recreational, transportation, and other facilities as the Secretary deems adequate or necessary; and

(3) is consistent with a comprehensive plan which covers, or with comprehensive planning being carried on for, the area in which the land is situated, and which meets the criteria established by the Secretary for such plans or planning; except that, in the case of land development covered by a mortgage with respect to which an insurance commitment is issued under this title before the expiration of one year after the date of enactment of the Housing and Urban Development Act of 1970, the requirement of this paragraph shall be applicable only if there is actually in existence on the date the commitment is issued a comprehensive plan which covers or comprehensive planning being carried on for, the area in which the land is situated.

NEW COMMUNITIES

SEC. 1004. (a) New communities consisting of developments, satisfying all other requirements under this title, may be approved under this section by the Secretary for mortgage insurance if they meet the requirements of subsection (b) of this section.

(b) A development shall be eligible for approval as a new community if the Secretary determines it will, in view of its size and scope, make a substantial contribution to the sound and economic growth of the area within which it is located in the form of

(1) substantial economies, made possible through large-scale development, in the provision of improved residential sites; (2) adequate housing to be provided for those who would be employed in the community or the surrounding area;

(3) maximum accessibility from the new residential sites to industrial or other employment centers and commerical, recreational, and cultural facilities in or near the community; and

(4) maximum accessibility to any major central city in the

area.

(c) No development shall be approved as a new community, by the Secretary under this section unless the construction of such development has been approved by the local governing body or bodies of the locality or localities in which it will be located and by the

Governor of the State in which such locality or localities are situated: Provided, That if such locality or localities have been delegated general powers of local self-government by State law or State constitution, as determined by the Secretary the approval of the Governor shall not be required.

(d) The aggregate amount of mortgages insured under this title with respect to new communities approved under this section and outstanding at any one time shall not exceed $250,000,000.

ENCOURAGEMENT OF SMALL BUILDERS AND MODERATE COST HOUSING

SEC. 1005. The Secretary shall adopt such requirements as he deems necessary in land development covered by mortgages insured under this title to encourage the maintenance of a diversified local home-building industry, broad participation by builders, particularly small builders, and the inclusion of a proper balance of housing for families of moderate or low income.

WATER AND SEWERAGE FACILITIES

SEC. 1006. After development of the land it shall be served by public systems for water and sewerage which are consistent with other existing or prospective systems within the area, except that

(a) in the case of systems for water, the land may be served by privately or cooperatively owned systems which are consistent with other existing or prospective systems within the area; are approved as adequate by the Secretary; and are regulated thereof, or (in the absence of such State or local regulation or supervised by the State or political subdivision or an agency supervision) are otherwise regulated in a manner acceptable to the Secretary, with respect to user rates and charges, capital structure, methods of operation, rate of return, and conditions and terms of any sale or transfer; and

(b) in the case of systems for sewerage, the land may be served by

(1) existing privately or cooperatively owned systems (including reasonable extensions thereto) which are approved as adequate by the Secretary, and which are regulated or supervised by the State or political subdivision or an agency thereof, or (in the absence of such State or local regulation or supervision) are otherwise regulated in a manner acceptable to the Secretary; or

(2) if it is necessary to develop a new system and the Secretary determines that public ownership of such a system is not feasible, an adequate privately or cooperatively owned new system (A) which he finds consistent with other existing or prospective systems within the area, (B) which during the period of such ownership will be regulated or supervised by the State or political subdivision or an agency thereof, or (in the absence of such State or local regulation or supervision) will be otherwise regulated in a manner acceptable to the Secretary, with respect to user rates and charges, capital structure, methods of operation, and rate of return, and (C) regarding which he receives assurances, satisfactory to him, with respect to eventual

public ownership and operation of the system and with respect to the conditions and terms of any sale or transfer.

RELEASES

SEC. 1007. The Secretary may, on such terms and conditions as he may prescribe, consent to the release or subordination of a part or parts of the mortgaged property from the lien of the mortgage.

PREMIUMS AND FEES

SEC. 1008. The Secretary shall collect reasonable premiums for the insurance of any mortgage under this title and make such charges as he determines are reasonable for the analysis of the land development plan and the appraisal and inspection of the property and improvements. On or before January 1, 1967, the Secretary shall make a report to the Congress concerning the premium rates and other charges under this title that he estimates will be adequate to provide income sufficient for a self-supporting program.

INSURANCE BENEFITS

SEC. 1009. The provisions of subsections (e), (g), (h), (i), (j), (k), (1), and (n) of section 207 of this Act shall be applicable to mortgages insured under this title, except that as applied to such mortgages (1) any reference therein to section 207 shall be deemed to refer to this title, and (2) any reference to an annual premium shall be deemed to refer to such premiums as the Secretary may designate under this title.

INCONTESTABILITY PROVISIONS

SEC. 1010. Any contract of insurance executed by the Secretary under this title shall be conclusive evidence of the eligibility of the mortgage for insurance, and the validity of any contract of insurance so executed shall be incontestable in the hands of an approved mortgagee from the date of the execution of such contract, except for fraud or material misrepresentation on the part of such approved mortgagee.

RULES AND REGULATIONS

SEC. 1011. The Secretary is authorized to make such rules and regulations and to require such agreements as he may deem necessary or desirable to carry out the provisions of this title.

TAXATION PROVISIONS

SEC. 1012. Nothing in this title shall be construed to exempt any real property acquired and held by the Secretary under this title from taxation by any State or political subdivision thereof to the

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same extent, according to its value, as the other real property is taxed.

COST CERTIFICATION

SEC. 1013. (a) The Secretary shall adopt such requirements as he determines necessary to assure, at reasonable intervals of time during land development and upon completion of such development, that the amount of the mortgage loan outstanding at each such interval does not exceed with respect to that portion of the land remaining under the lien of the mortgage (1) 50 per centum of the Secretary's estimate of the value of such remaining land before development, plus (2) 90 per centum of the actual costs of the development allocated by the Secretary to such remaining land.

(b) From time to time during, and upon completion of, the development, the Secretary shall require the mortgagor to certify as to the actual costs of development of the land.

(c) Certifications required pursuant to this section shall be accompanied by such data and records as the Secretary shall prescribe.

(d) A mortgagor's certification approved by the Secretary shall be final and incontestable except for fraud or material misrepresentation on the part of the mortgagor.

(e) As used in this section, the term "actual costs" means the costs (exclusive of kickbacks, rebates, or trade discounts) to the mortgagor of the improvements involved. These costs include amounts paid for labor, materials, construction contracts, land planning, engineers' and architect's fees, surveys, taxes, and interest during development, organizational and legal expenses, such allocation of general overhead expenses as are acceptable to the Secretary, and other items of expense incidental to development which may be approved by the Secretary. If the Secretary determines there is an identity of interest between the mortgagor and the contractor, there may be included an allowance for the contractor's profit in an amount deemed reasonable by the Secretary.

TITLE XI-MORTGAGE INSURANCE FOR GROUP PRACTICE FACILITIES1

INSURANCE OF MORTGAGES

SEC. 1101. (a) The Secretary is authorized (1) to insure mortgages (including advances on such mortgages during construction) upon such terms and conditions as he may prescribe, in accordance with the provisions of this title, and (2) to make commitments for the insuring of such mortgages prior to the date of their execution or disbursement thereon. No mortgage shall be insured under this title after September 30, 1985, except pursuant to a commitment to insure issued before that date.

Title XI was added by sec. 502, Demonstration Cities and Metropolitan Development Act of 1966, Public Law 89-754, approved November 3, 1966, 80 Stat. 1255, 1274.

Sec. 501 of the Demonstration Cities and Metropolitan Development Act of 1966 states that it is the purpose of title XI "to assure the availability of credit on reasonable terms to units or organizations engaged in the group practice of medicine, optometry, or dentistry, particularly those in smaller communities and those sponsored by cooperative or other nonprofit organizations, to assist in financing the construction and equipment of group practice facilities”.